Updated: 9/29/07
When I read the following quote, I immediately thought of the recent Business Week article claiming that availability – which they claimed is being hampered by oil companies – is the primary reason E-85 is not taking hold.
I don’t buy E-85 for my flex fuel Ranger even though it is readily available around here with all the ethanol plants. It’s because the price is never less than 80% of the price of E-10. I get 80% of the mileage with E-85 that I get with E-10.
The above quote comes from a devoted ethanol advocate and corn farmer, who frequently posts at The Oil Drum. If he isn’t willing to spend extra money on E-85, then can you really expect the general public to do so? Price is a much clearer explanation than Business Week’s conspiracy theories for why E-85 is not more popular. Price matters.
In addition to gasoline and diesel, AAA has started tracking E85 pricing. Their report is published each day at:
Not only do they publish the price of E85, but they also publish a BTU-adjusted price, which is actually a gasoline equivalent price. This price can be used to compare actual per mile fuel costs. AAA explains:
The BTU-adjusted price of E-85 is the nationwide average price of E-85 adjusted to reflect the lower energy content as expressed in British Thermal Units – and hence miles per gallon – available in a gallon of E-85 as compared to the same volume of conventional gasoline. The BTU-adjusted price calculated by OPIS and AAA is not an actual retail average price paid by consumers. It is calculated and displayed as part of AAA’s Fuel Gauge Report because according to the Energy Information Administration E-85 delivers approximately 25 percent fewer BTUs by volume than conventional gasoline. Because “flexible fuel” vehicles can operate on conventional fuel and E-85, the BTU-adjusted price of E-85 is essential to understanding the cost implications of each fuel choice for consumers.
It is of interest to note these BTU-adjusted E85 prices. Despite the fact that ethanol prices (and margins) have collapsed, and gasoline prices remain high, the adjusted E85 price remains higher than that of gasoline. Yesterday’s prices show regular at $2.81, E85 at $2.33, and the BTU-adjusted price of E85 at $3.07. I think ethanol prices will begin to recover as the mandated ethanol levels increase and as the industry goes through a shakeout, so the E85 price gap is not likely to significantly improve.
Is it really a mystery why gas station owners aren’t rushing out to install more E85 pumps? If the demand is there, the pumps will come.
Great find! About time we got better ethanol price data.
the adjusted E85 price remains higher than that of gasoline.
Higher than regular, lower than premium. But doesn’t E85 have higher octane? Should E85 perhaps cost even more than premium?
I wonder when performance carmakers will jump on this. An engine tuned for E85 with knock sensors to degrade performance when running on premium (or worse) should outperform one which only burns premium, right? Hmmm.
Is it really a mystery why gas station owners aren’t rushing out to install more E85 pumps?
Because retailers hate to carry products for which people will pay more?
Great to see AAA getting on top of this. With an objective, consumer oriented organization getting the BTU-related price word out, the ethanol choir is going to have an increasingly tough time selling their misinformation…
Does anyone know how the blender’s tax credit works with respect to E-85? Does the E-85 blender see the same 51-cent benefit that an E-10 blender gets? I’m trying to figure out what the right calculation of economics is for E-85.
While retail prices of E-85 seem unattractive, wholesale ethanol prices (once you figure in the credit) are well below wholesale gasoline, even after correcting for MPG.
Anonymous writes:
Does the E-85 blender see the same 51-cent benefit that an E-10 blender gets?
While retail prices of E-85 seem unattractive, wholesale ethanol prices (once you figure in the credit) are well below wholesale gasoline, even after correcting for MPG.
Since E10 is 10% ethanol, an E10 blender gets 10% x 51 = 5.1 cents tax credit per gallon of E10. Likewise, E85 is 85% ethanol, so a blender gets 85% x 51 = 43.35 cents tax credit per gallon of E85.
Where can we find wholesale ethanol prices?
Clee, scroll down to State Average Fuel Ethanol Rack Prices for some spot market prices. Some are stale and some of the state-to-state variation is due to transport problems. But some of the prices (e.g. Ohio) still don’t make sense.
The link to “live commodity prices” at the top of the page will show you Chicago Board of Trade ethanol futures pricing. The site has other interesting market information as well.
Thanks, doggydogworld
I came across http://e85prices.com/ which shows retail price spreads between E85 and gasoline at individual stations. Too bad some of the numbers are a month out of date.